Restaurants rally

Lauren Fox

Sunday

Mar 27, 2011 at 12:01 AM

The recession was tough on the restaurant industry as cash-strapped consumers cut back on eating out, while restaurant costs stayed the same or rose. Between spring 2009 and spring 2010 alone, more than 5,200 U.S. restaurants, most of them independently owned, shut their doors, according to the NPD Group, a New York-based business research company.

Locally, the list of closures included such well-known eateries as Chanterelle, El Vaquero, the Bene Gourmet Pizza chain and Cafe Zenon, which later reopened under new ownership.

For many of the ones that survived, change became a key to survival. And, now, with the National Restaurant Association predicting growth in 2011, restaurateurs say lessons learned in the recession will make them stronger.

For Armen Kevrekian, the owner of Ambrosia Restaurant & Bar, cutting back was inevitable during the recession. But, Kevrekian said, his staff has became more efficient as a result.

“We have a better trained staff now then we ever did before,” Kevrekian said. “We used to have pizza cooks that were separate from the line cooks that were separate from our seafood cooks. But now to comply with the economic reality, we have cooks who know how to do it all.”

Although economists have pronounced the recession officially ended, Kevrekian doesn’t think it is over yet. But his business is finally starting to stabilize, he said.

“Business is pretty flat, but it is more predictable than it used to be,” he said. “In the past, it was very difficult to plan for the night because one did not know how much business we were going to do. Sometimes we had too much, other times not enough.”

Full-service style restaurants like Kevrekian’s took a harder hit than some of their more casual competitors because sit-down restaurants were perceived by customers as being more expensive than their quick-casual competitors, according to Oregon Restaurant and Lodging Association President Bob Jensen.

One consumer Ryan Fitch, 17, concurred with Jensen’s analysis. “I’ve definitely cut back on eating out especially at nice sit-down places,” Fitch said. “I just don’t have the cash to spend eating at expensive places.”

But for some eateries, the recession presented opportunities as well as challenges, a chance to take advantage of lower rents to move to a better location, or even cautiously expand, as they positioned themselves for the recovery.

Those expansions sometimes presented new challenges.

Family-owned Pegasus Pizza opened a second location at Oakway Center in 2010, with a very different sort of clientèle from the customers at the campus hangout.

“We’d been looking to expand for quite a while and when this location opened up, we didn’t want to pass it up,” Pegasus Pizza General Manager Calen Willis said. “Right now it is just kind of a balancing act. Campus seems to kind of drive on its own with the University of Oregon there. This is very different. People don’t just know we are here. We have to find a way to tell them.”

Willis said that when his team moved to Oakway Center, there were a lot of discussions about switching over to a full-service pizzeria to match a more upscale customer base. But the crew decided it made more sense to go with a counter-service restaurant, which required less overhead in the face of an uncertain economic forecast.

And, like a number of other restaurateurs, Willis had noticed that while a lot of full service restaurants seemed to be struggling, quick service eateries looked to be doing better.

Take brothers Phil and Jim West, for example. The Eugene restaurateurs and co-owners of Westraunt Concepts — which operates “quick-casual” restaurants including Mucho Gusto Mexican Kitchen — also saw an opportunity in the midst of the recession. They opened DickieJo’s Burgers in 2008, followed by a second DickieJo’s in 2010.

“We saw an opening in the market. Hamburgers are popular. That is why there are so many silly hamburger places in this country,” Jim West said. “Across the country, during the recession, hamburgers showed up on every menu from fine dining to fast food. We jumped on a trend.”

Their leap of faith paid off.

“We’ve comped (met their comparables) every year,” West said. “Business is really good.”

West said Westraunt Concepts has a simple business model that includes the industry big three — low overhead, quality food and prime locations.

In tough economic times, West said the “quick-casual” style of his restaurants has gained momentum not only in Lane County, but in every corner of the country.

Sales at “quick service restaurants are projected to grow by 3.3 percent this year, to $167 billion, while full-service restaurants’ sales are expect to grow by 3 percent, according to the National Restaurant Association.

“The fast, casual hamburger joint is the fastest growing trend in America,” West said. “The only downside is there is no waiter so it isn’t exactly a special date place or a place to take your mom for Mother’s Day — unless, of course, she is a hamburger fan.”

Jensen said there are still a lot of challenges facing food retailers, but he added that restaurants that have been flexible during the recession are thriving.

“Businesses who have gone to quick serve are doing better in this economy,” Jensen said. “It’s a way to cut overhead cost without cutting food quality.”

Cafe Yumm!, a quick serve restaurant chain, expanded in a big way during the recession.

Since 2007, the Eugene-based company has opened two new stores in Eugene and two in Springfield as well as expanded into the Corvallis and Portland markets.

“We have been one of the few success stories,” Cafe Yumm! Vice President Ed Gerdes said. “We have been able to maintain a lower price point for high quality food in a time when people were looking for healthy, delicious alternatives.”

Gerdes said that, as the recovery slowly gets under way, he foresees that the fast-casual restaurants will bounce back sooner from the recession than the more formal dining spots.

“I don’t think sitting down and having a meal is going to come back as quickly,” he said. “Fine dining has lost a large part of their customer base, and I don’t think that they are coming back any time soon.”

Economist Brian Rooney said he is seeing signs that a recovery is under way in the local restaurant industry.

The number of people working in the Lane County food and drink industry has grown by 200 overall from January 2010 to January 2011, a two percent increase and more than twice the national growth average in the industry, said Rooney, who is with the state Employment Department.

“It is good to see that this is one of the industries that has been growing recently,” Rooney said. “During healthy economic times, a 2 percent increase each year is considered a good growth rate.”

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